Is Homo Economicus A Sociopath?

The other day I was reading Martha Stout's The Sociopath Next Door. Although it's engaging, it didn't tell me anything I didn't already know. But it did remind me of a question I've wondered about before: Is homo economicus a sociopath? Is microeconomic theory founded on the premise that the percentage of sociopaths in the population is not 4%, as Stout claims, but 100%?

Modern psychiatrists prefer to call sociopaths "people suffering from anti-social personality disorder," though as a Szaszian aside, I'd say that if anyone "suffers" from it, it's the people who don't have it! In any case, here are its main official symptoms:

There is a pervasive pattern of disregard for and violation of the rights of others occurring since age 15 years, as indicated by three (or more) of the following:

(1) failure to conform to social norms with respect to lawful behaviors as indicated by repeatedly performing acts that are grounds for arrest

(2) deceitfulness, as indicated by repeated lying, use of aliases, or conning others for personal profit or pleasure

(3) impulsivity or failure to plan ahead

(4) irritability and aggressiveness, as indicated by repeated physical fights or assaults

(7) lack of remorse, as indicated by being indifferent to or rationalizing having hurt, mistreated, or stolen from another

Number seven - lack of remorse - fits homo economicus perfectly. He might not find it profitable to hurt, mistreat, or steal, but if he did it, he wouldn't lose sleep over it. Several of the others sound like things that homo economicus would do conditions were right. Homo economicus would perform acts that were grounds for arrest, deceive, and disregard the safety of others if it were profitable.

On the other hand, however, several of the symptoms sound like the opposite of homo economicus. "Failure to plan ahead"? Homo economicus is a consummate planner - an idea formalized by game theorists as backwards induction. Irritability? Homo economicus will hurt others for personal gain, but this sounds more like getting into a pointless fight on the spur of the moment. Disregard for own safety? No way. Homo economicus always looks out for number one. Consistent irresponsibility? Negative. Homo economicus might be irresponsible if he were not paid for being responsible, but he shows up for work and pays his bills if the alternative is being fired and unable to get a home loan.

If you take the criteria literally, however, you only need three symptoms, and it doesn't matter if the others are 180 degrees off. The upshot is that in a society where prices do not discourage predatory behavior, homo economicus qualifies as a sociopath. But if prices do discourage predatory behavior, homo economicus is a model citizen minus remorse.

Comments and Sharing

Does economic theory require behavior like “homo economicus” 100% of the time, or only at the margin? Will micro-economic theory still hold if people have a certain amount of altruism that will increase the lower the cost to them of being altruistic and decrease the higher the cost of being altruistic? The same with obeying laws. Isn’t economic theory consistent with people who usually obey the law because it is the law, but obey less the higher the cost of being law biding?

Sociopathy is essentially defined by a lack of certain interpersonal attributes. So it would make sense the homo economicus, stripped down to essential economic characteristics would meet the criteria.

But if you assign utility to feelings from altruistic actions and such, you still have the same homo economicus, but he doesn't meet the criteria for antisocial personality disorder.

The homo economicus construct is very flexible. (In fact it is said by some to be an empty concept because of this.) All that is excluded (by definition) is inconsistent choice (say, violations of transivity - but maybe not even that!), or sub-optimal selections in the constraint set.

So: homo economicus can be the saint, with an altruistic utility function, who feels disutility from the sheer act of deception or inflicting of harm.

Or homo economicus couldn't care less about others, and purely have his own utility in mind; and in fact commit a crime when the expected utility gain exceeds the expected utility loss (a la Becker). Perhaps it is the latter which is referred to as a sociopath. But such behavior would require one or a combination of the following:

low or negative aversion to risk
low probability of detection/enforcement of penalty
low opportunity costs from continuing a life of legal behavior

Psychopaths with normal hippocampuses may fit the homo economicus profile better, possessing normal levels of fear for negative consequences. They will commit horrible crimes without remorse, provided that the price is right.
http://www.futurepundit.com/archives/001998.html

Social capital theory is subversive of the homo economicus concept. Social capital theorists have pointed out, and in some cases demonstrated empirically, that informal social ties operate as a form of "capital" in that they augment incomes without being fully used up in the process.

Social capital relies on reciprocity: I do something for you, you do something for me later. In this sense it's the same as a market transaction in that there is an exchange in which both sides benefit. But in the case of social capital the exchange is non-contractual.

The internal economy of a family is rich in this kind of social capital transaction. My wife is tired tonight so I do the dishes. Tomorrow I'm tired so she does the dishes. We both benefit because we do the dishes when we incur less disutility from the task. But when I did the dishes, I didn't extract a promise from her (typically) that she would do the dishes on some other occasion.

It is possible for homo-economicus-type individuals, devoid of altruism, to sustain social capital type interactions. I may feel no altruism towards my wife, but I rationally view our interactions as a positive-sum game (in the medium run), which it is in my interest to cooperate in and thus to continue. This depends on the probability that my non-cooperation will end the game, and the probability that my cooperation will cause the game to continue.

But it is much easier to sustain social capital interactions among people who are motivated by altruism. If I feel altruism towards my wife, I'll do the dishes because making her do them, tired as she is, will cause me more disutility than doing them myself. My action will be the same regardless of my expectations for the future of our relationship.

Some of our utility is derived from formal exchange in the marketplace. Much of it is derived from informal exchange in settings rich in social capital. It is evident from theory that in the latter environment altruism is very helpful. But then, there are a lot of grey areas between social capital interactions and formal market exchange. The value of altruism in the social capital context may highlight the value of (need for?) altruism in the market context as well, if society is to continue functioning.

While these psychology to social theory jumps are often cute, they're usually junk cocktail party discussions; But the glorification of the sociopath is rather appalling.

These remorseless things are dangerous at best, having no concept of altruism, remorse, loyalty, friendship or love. They will gut you if advantage presses. They are in the truest sense of the word, monsters.

If anything, economic theory suggests sociopaths will be nonexistent, or transitory. In the strong form of the competitive model (fully informed agents, existence of contingent claims against all possible states of the world) properties (1) (2) and (6) are effectively precluded. In the modified form, with incomplete information, learning, and reputation, properties (2) (4) (5) (6) become common knowledge with such agents either marginalized or required to post large performance bonds.

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